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Allstate may face revived suit over agent benefits
Bloomberg News
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Published: 7/29/2009 4:39 PM

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Allstate Corp., the largest publicly traded U.S. home and auto insurer, may have to face a $2 billion lawsuit filed by current and former agents over benefits after an appeals court ruled the case was hastily dismissed.

The U.S. Equal Employment Opportunity Commission sued Allstate after it refused to compensate agents who were forced to become independent contractors as part of a reorganization. The insurer owed as much as $2 billion to 6,500 current and former agents affected by the plan, the EEOC said. The U.S. Court of Appeals in Philadelphia sent the case back to the trial court, saying the judge failed to give it full consideration.

"After many years of litigation, the district court granted Allstate's dispositive motions in a two-page order," the appeals court said in a ruling made public today. "The order was conclusory in tone and content and simply fails to do justice to the myriad issues before the court."

Allstate's plan to convert employee agents to contractors was part of a reorganization begun in 1999 by former Chief Executive Officer Edward Liddy, now head of American International Group Inc. The EEOC argued that Allstate violated employment laws by requiring its agents to sign waivers barring them from suing the company over the change.

Allstate fell 19 cents to $26.12 in New York Stock Exchange composite trading at 2:43 p.m. The shares have declined 20 percent this year.